Quick enactment of H.R. 1007 could help solve this problem efficiently and effectively.

A thriving semiconductor industry is of tremendous importance to the people of the United States, of California, and to the people of San Jose and the Silicon Valley. The semiconductor chip, marketed commercially only since 1961, now represents a $5 billion global industry. Be it in the telecommunications or aerospace industries, or in home stereos and television games, the integrated circuit is a major part of our lives today. Of course, to the people of the Santa Clara Valley and elsewhere whose livelihoods depend on the semiconductor industry, the industry is that much more important. Yet, we have only begun to realize the potential of chip technology.

Chip technology is advancing so quickly that the full use by society of present chips will be restrained only by a more capable and efficient chip. How soon will we use a chip which holds one thousand times the information today's chip holds? The cost of the search for a new, more powerful chip has escalated, and will continue to escalate, very rapidly. Yet, the tremendous investment required for this search is threatened by chip pirating. Chip pirates have become more sophisticated and adroit in quickly copying new chip patterns for another company's use.

And, Silicon Valley firms-firms which do much of the chip research and development-are faced with increasing uncertainty about their future ability to recoup their research and development investment. If chip pirating is allowed to continue unchecked, what happens to the incentive to invest in chip research and development?

Copyright protection has long been recognized in this country as vital to the operations of free trade and free enterprise. By not extending copyright protection to the creators of new semiconductor chip patterns, we in government could jeopardize the development of America's most promising growth industry.

I hope that today's hearings will bring out my point in more detail. I am sure you will agree that H.R. 1007 is not only vitally needed legislation, it is workable and effective legislation.

I caution you not to interpret H.R. 1007 as a government hand-out to the semiconductor industry. Rather, H.R. 1007 is a simple, long overdue, step toward ensuring fair competition in the development and marketing of semiconductor chips.

The problem is not overwhelmingly difficult, and the importance of H.R. 1007 is clear. Thus, let me stress the responsibility of Congress to act swiftly and decisively in passing H.R. 1007.

Thank you.

Mr. KASTENMEIER. We'll have a few questions, hopefully, for Mr. Baumgarten. He doesn't have to leave; therefore, he will be available for us for later questions if, as in the course of the testimony of other witnesses, questions arise which may seem appropriate for you to answer, will you be on hand, Mr. Baumgarten?

Mr. BAUMGARTEN. I'd be happy to remain, Mr. Chairman. Mr. KASTENMEIER. I'd like to compliment you for your statement. It is thorough. Obviously, your office has spent more time studying this issue than we have in Congress-I'm talking about my own subcommittee at this point in time.

One of our difficulties is to determine what in fact different things mean, what are photographic masks, what are chips, and all the other technical or pseudo-technical terms used in connection with this. You have raised at the outset a number of issues, but it is difficult to know what we're talking about when we talk about schematic drawings or diagrams or mylar sheets and the application of the copyright law to these various terms.

Do I gather you to suggest that any contemplated legislative change would require definitions for some of these terms?

Mr. BAUMGARTEN. I think I'd like to defer an absolute answer to that until I hear some more of the testimony myself, Mr. Chairman. Our experience is not quite as limited as yours. We were at one point forced to develop more specific knowledge in the area when Intel Corp. brought an action against the Copyright Office, to force us to register chips. The action was dismissed without preju

dice on the basis that the Copyright Office would hold a hearing in the area. We have, of course, deferred our hearing once you commenced hearings on Mr. Edwards bill.

The one point I think should be clarified during the questioning perhaps of some of the other witnesses is, are there differences between semiconductor chips and integrated circuit chips. And, of course, what does each term mean. There may be material covered under one term that is not covered under the other, or vice versa, and perhaps the word "semiconductor chips" belongs in the body of the bill rather than really in its title. I don't know. I would like to have the benefit of the additional testimony, as you would, sir. Mr. KASTENMEIER. To your knowledge, is there any mention of prospective suits against the Copyright Office in this particular area? Is there any pending litigation affecting this area of coverage?

Mr. BAUMGARTEN. There are no copyright infringement actions that I am familiar with, Mr. Chairman. Whether there are unfair competition actions or patent infringements, or indeed, copyright complaints that have been filed but not brought to judgment, I don't know. I believe the answer is no, but I'm not sure.

Mr. KASTENMEIER. Other than the Copyright Act of 1976, for which the bill suggests amendment, are there any other recourses pursuant to law that organizations have, such as unfair competition, or other rights they might avail themselves of to protect what they presume to protect through such a bill?

Mr. BAUMGARTEN. Let me answer that with respect to-definitely with respect to different types of subject matter in the bill. With respect to the photographic masks, Mr. Chairman, the Copyright Office believes that they are proper subject matters of copyright protection under the preemption provision of the bill. That would essentially remove any possibility of unfair competition actions for mere duplication. There might be actions for trade secret piracy if a former employee would take the design away to a new employer, but simple duplication would be preempted.

On the other hand, with respect to the configuration of the chips or the patterns of the chips, since it is our belief those are not now subject matter of copyright protection, the preemption provisions would not apply and there would be a theoretical possibility of an action for misappropriation or unfair competition under State law. This was brought home rather clearly recently, if the Chairman. will recall, as I referred to earlier, you're committee's decision to defer the possibility of typeface protection under the statute; since declaration of typeface protection was not protected, that would lead to the same conclusion that State law is not preempted and we now understand is in a magistrate's report in a Federal court action in the southern district of New York.

The court concluded that since your committee decided it was not proper subject matter of copyright, it could be-rights against duplication could be enforced under State law and the misappropriation action was sustained. The same type of reasoning might apply in this area.

Turning from state law, there is the possibility of patent protection either under the design patent statutes, or the mechanical, process patent statutes. As I suggested in my statement this is one

area we suggest the committee might look into, whether that's not sufficient. Of course, the standards of patent protection are much more severe than those of copyright protection. You have to show novelty uniqueness and improvement over the prior art, which is not required for copyright purposes.

We understand basically the desire to enact H.R. 1007 that that type of protection is apparently not perceived to be adequate; either the standards of novelty and invention are too high, or perhaps too cumbersome to obtain, or the cross-licensing, which we understand operates within the industry, makes for practical purposes the enforcement of patent rights not conducive to the type of relief that the proponents are seeking. I think again, the availability for patent protection is something perhaps addressed to some of the attorneys for the industry, and I'll be happy to respond again after I hear some of those.

Mr. KASTENMEIER. You, I think, alluded to the term, as in the question with typeface and design protection. Would it appear here that that the term "life plus 50 or 75 years" is too long or inappropriate for the protection of some of the interests sought to be protected here?

Mr. BAUMGARTEN. Subject to the same qualifications, Mr. Chairman, lack of expertise, I think there is good reason to believe it is too long and that even the proponents of this type of protection would concede that that is not the duration that they would require.

Mr. KASTENMEIER. At this point I'd like to yield, first to Mr. Edwards.

Mr. EDWARDS. Thank you, Mr. Chairman. I join my chairman in complimenting you, Mr. Baumgarten on your statement.

I only have one question, actually, and that is that you seem to make it very clear that these patterns on integrated circuit chips are not copyrightable today, is that correct, generally speaking? Mr. BAUMGARTEN. In the judgment and practice of the Copyright Office, the configuration of the chip is not-if you were to depict these patterns on an earlier piece of paper, we believe that piece of paper and the drawing is copyrighted, but there are limitations on the rights extended thereby. But the chip itself, your statement is accurate.

Mr. EDWARDS. And in the opinion of the U.S. Copyright Office, you believe that with certain refinements that the bill should be enacted?

Mr. BAUMGARTEN. We believe that there should be a type of protection available to protect the chips that currently is not now the case. We are concerned that all the attributes now in the bill are not particularly appropriate to that type of protection and should be examined closer. This was the tradition of design protection.

Mr. EDWARDS. Thank you.

Mr. KASTENMEIER. The gentleman from California?

Mr. MINETA. Thank you, Mr. Chairman.

The significance between what is in the title of the bill, semiconductor chips, as differentiated from what's in the text of the bill itself, referring to integrated circuit chip, would you say that that is a question of definition that you want to-

Mr. BAUMGARTEN. Mr. Mineta, I've been given reason to believe that the integrated circuit chips covers a broader area subject matter than the phrase semiconductor chips, and whether it's broader or less, my only suggestion is that we find out the differences, and if so, decide which it is we want to protect, whether by definition or otherwise. Apparently, at least I've been told, there are differences; one is broader, one is more limited, and I just think we have to be consistent.

Mr. MINETA. Nevertheless, as far as the intention of what the legislation is trying to get at, you feel that that is something that ought to be enacted into law?

Mr. BAUMGARTEN. We could support the concept of protecting. I didn't mean to be picyune, and that was a minor portion, but we thought it was something that should be cleaned up in the early stage. But we do feel that there should be protection against this new type of duplication of these new devices. Whether it should be the type of protection that you would get from merely tacking on computer chips to the existing law, or whether you should tack on a few other limitations-for example, term it alike or something-I think we would like to consider first, together with your subcommittee after hearing additional testimony.

Mr. MINETA. Very quickly, just for my own edification, what's the difference between a published work and an unpublished work as it relates to, in this case, the chips?

Mr. BAUMGARTEN. The difference doesn't have the major difference it has under the old law. One particular difference might occur if a chip were considered not to be published it would be a difference of how long protection existed, because protection, assuming they are works made for hire, or works made under employment, 75 years from publication or 100 years from creation, whichever first expires. If they were never published, then you would have a straight 100-year term. There are other provisions sprinkled throughout the act which operate differently depending upon whether the work is published or not published. I think for this subject matter, and omitting any specific limitations and the like, none of these would really be major. The principal one would be in terms of protection.

Under the old law, it was an entirely different ball game, because there, whether it was published or unpublished was the fact that would determine whether you had Federal protection or not, but that difference between unpublished and published works has been removed with the enactment of the 1976 act.

Mr. MINETA. Except for the term, why would the U.S. Copyright Office then accept for registration an unpublished work and refuse for registration a published work?

Mr. BAUMGARTEN. I don't think that's an accurate statement of our practice, Mr. Mineta.

Mr. MINETA. Wasn't that a surrounding suit-

Mr. BAUMGARTEN. Yes, sir, but that was-and one of the reasons I think we joined with Intel in suggesting that the litigation was not the appropriate place to solve the question was that that was based upon the provision of the old law which had nothing to do with chips, really, or subject matter, which stated that if a work is registered in unpublished form you were required to deposit the

published version. They deposited the drawings, and we took them as I said we would. They then said that the chip itself was a published version of an unpublished drawing and we disagreed. We said, for example, if we took the drawing of a car as an unpublished drawing, we would not accept deposit of the car, or if we took the drawing of a refrigerator we would not accept deposit of the refrigerator. The fact that we accepted the drawing of the chip would not lead us to deposit the chip itself.

In other words, Mr. Mineta, we did not concede that the chip was a published version of the drawing, and I believe that your committee's actions in defining pictorial, graphic and sculptural work, and in fact expressed in your committee's report in 1976, this principle was in fact adopted. It's not a question of publication or nonpublication, it's a question of whether the drawing and the chip are the same thing, and we believe that in contemplation of the law they

are not.

Mr. MINETA. Thank you very much.

Thank you, Mr. Chairman.

Mr. KASTENMEIER. Counsel, Mr. Mooney?

Mr. MOONEY. No questions.

Mr. KASTENMEIER. Mr. Lehman?

Mr. LEHMAN. Mr. Baumgarten, one of the questions that has come up is whether or not, assuming H.R. 1007 were enacted into law, designs of computer semiconductor chips could be used freely for purposes other than just flat copying. In other words, could you take them apart, examine their design by engineers, technicians, and have other companies copy the design for their own internal use and that sort of thing? I'd like you to comment on whether or not you think that H.R. 1007 as presently drafted offers that flexibility, or if it doesn't, whether it ought to be modified to provide for that kind of flexibility, for other uses, other than direct, flat copying.

Mr. BAUMGARTEN. If I had a clear answer, Mr. Lehman, I perhaps wouldn't have asked some of the questions I did ask.

Perhaps what you are suggesting was raised by Mr. Edwards in his remarks in the Congressional Record of October 14, 1978, at which time Mr. Edwards suggested that some of these uses for purposes of explanation, for purposes of examination for inhouse purposes, would fall within the scope of fair use and therefore would not be precluded by the terms of H.R. 1007. That's entirely possible. As the subcommittee is aware, however, fair use is not defined in the law. It would have to be developed by the courts on a case by case analysis, and although the type of remark extended by Mr. Edwards in the Congressional Record would certainly have effect, and I imagine the committee might wish, if it was to pass the bill, include it in the report language, it might considerably, the possibility that that would be an infringement might inhibit some type of dealing with chips that your committee does not wish to inhibit, and that's precisely the question I suggested the subcommittee explore. I don't have an answer, but I think what you've said is a very good example of the question I was raising.

Mr. LEHMAN. We could certainly draft some legislation which would provide for that?

Mr. BAUMGARTEN. You certainly could.

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